LCCI Seeks Consistency In Forex Market Reform

Lagos Chamber of Commerce and Industry (LCCI), has urged the Central Bank of Nigeria (CBN) to be consistent with the foreign exchange market reforms.

The president of LCCI, Mr. Gabriel Idahosa stated this at the Chamber third quarterly press conference on the State of the Economy held in Lagos.

Idahosa said that “as we look back at the happenings in the second quarter and try to project an outlook for the third quarter, the global economy continues to experience persistently high inflation, aggressive global monetary policy tightening, supply chain disruptions, and growing uncertainties amidst geopolitical tensions.

“With many institutions reviewing their earlier global economic growth projections, the level of uncertainties has continued to threaten business and economic planning across the globe.”

He said that the manufacturing sector also continued to struggle, recording a weak growth of 1.49 per cent in the first quarter compared to 1.61 per cent in the corresponding quarter of 2023, saying that the weak performance is obviously due to weak consumer demand due to weakened purchasing power and high cost of production due to FOREX illiquidity, high interest rate, among others.

LCCI urged “the government to tackle the problem of insecurity, which has continued to threaten productive activities in the real economy sector.

“While we appreciate the government’s efforts in fighting all manner of crimes and insurgencies, we believe more can be done until we have a safe environment where farmers can produce and move their goods from farms to markets in certain areas of the country.”

Idahosa pointed out that “on managing the persistently high inflation, we recommend that monetary and fiscal authorities focus on the factors driving the inflation rates by tackling supply-side deficiencies instead of focusing too much on demand-side management.”

He  urged “the CBN to be consistent with the FOREX market reforms until we see the desired impact on the rising inflation rate and burdening high interest rates.

“We urge the CBN to be consistent with the FOREX market reforms until we see the desired impact on the rising inflation rate and burdening high interest rates.

“We recommend the CBN explore alternative policy measures that promote credit access, stimulate investment, and support entrepreneurship.

“This could include targeted interventions such as concessional lending facilities, loan guarantees, and interest rate subsidies tailored to the needs of SMEs and key sectors of the economy like agriculture, manufacturing, and power technology.”

On power supply, LCCI president said the government should create the needed environment where local meter manufacturing can thrive to bridge the current gap in meter deployment, saying this will reduce the pressure on the foreign exchange market, create jobs, generate revenue for the government, and develop local expertise in meter manufacturing.

“Other areas of intervention could be adopting a cheaper duty rate for importing agricultural inputs for local manufacturing and investment in building agro-industrial hubs across the country,” he added.